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Futures Tumble, European Tech Stocks Plunge Amid Surging Virus Cases, Reflation Trade Fears

US equity futures, European tech stocks and global shares were hit hard on Monday as surging coronavirus cases in Europe (over the weekend, Spain announced a national curfew) and the United States clouded the global economic outlook, while sliding odds of a “Blue Wave” according to online bettor PredictIt sparked fresh doubt in the reflation trade; meanwhile China’s leaders meet to ponder the future of the world’s 2nd largest economy. Emini futures dropped as much as 1.1% in early Monday trading.

Boeing slid 1.3% in pre-market trading after China announced it will impose unspecified sanctions on the defense unit of Boeing, Lockheed Martin and Raytheon after the U.S. approved $1.8 billion in arms sales to Taiwan last week.

Even though by now it’s abundantly clear no deal is coming before the election, some traders remained focused on the prospect of a U.S. economic aid package, even as time runs out to finish a deal by the November election after months of wrangling. House Speaker Nancy Pelosi said the burden is on President Donald Trump to push forward on stimulus talks, while Treasury Secretary Steven Mnuchin said there’s been significant progress, but blamed Pelosi for holding up an agreement.

“The current mood in the market is bracing and non committal,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA. “The concern around the Covid-19 pandemic and U.S. fiscal stimulus is dominating the market. Everyone is talking up the Blue Wave, but behind the scenes ‘what if 2016 repeats?’ is keeping investors cautious.”

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